POLITICS
New parliament session opens (amid celebration)
The article in the following link from the BBC covers the closure of the old parliament and the opening of the new—an historic moment in Myanmar’s history, celebrated with a party, as you will see from the video at the end
http://www.bbc.co.uk/news/world-asia-35456982
The speakers of the lower house of the new parliament have been chosen. They are U Win Myint and U T Khun Myat. The first is seen as a long-time ally of Aung San Suu Kyi; the latter—who is a member of the new opposition USDP—less so, though he is thought to be close to U Shwe Mann, the more reform-minded speaker of the lower house in the last government.
The NLD’s nominations for the posts of speaker and deputy speaker in the upper house have also been announced. U Mahn Win Khaing Tan (speaker) is a member of the NLD and a Kayin Christian. U Aye Thar Aung (deputy speaker) is a member of the Arakan National Party, the minority ethnic party with the largest representation in the new parliament – evidence of the NLD’s professed “inclusive” approach to government appointments. For profiles of all, please use the following link to the Myanmar Times.
http://www.mmtimes.com/index.php/national-news/18742-speaker-profiles.html
Much speculation, but no clarity yet, over identity of the next president
As might have been expected, there has been plenty of speculation over who is to serve as Myanmar’s next president, including suggestions (denied elsewhere) that the constitution might yet be changed to permit Daw Aung San Suu Kyi to take the post. The NLD leader has urged the country not to expect an announcement immediately; parliament has until 17th March to submit its nominations and President Thein Sein’s term does not end until the end of the month.
President Thein Sein to lead opposition USDP after term ends
Amid talk of a split in the USDP’s ranks, and speculation over the possible expulsion of some of its more liberal members, including former speaker Shwe Mann, it has been announced that Thein Sein will reassume the role of party leader when his term as president expires. Shwe Mann—who was at one point thought a possible compromise candidate for the president’s job and then perhaps destined for a senior post such as head of the electoral commission—is to head the more junior Commission for the Administration of Legal Affairs and Special Issues.
For a flavor of the some of the speculation doing the rounds in Nay Pyi Taw and Yangon, use the link to the following article in the Myanmar Times:
http://www.mmtimes.com/index.php/national-news/nay-pyi-taw/18762-usdp-poised-on-the-brink-of-a-split.html
Update on first meetings of Union Peace Conference
In the meantime, five days of talks at the Union Peace Conference, which constitutes the latest stage in the “nationwide” ceasefire process, has ended with little progress being made. As the following article suggests, there continues to be a significant gap between the army – which insists on ceasefires before talks—and the groups, and between the signatory and non-signatory ethnic groups who wish to move to an agreement over the development of a federal union before they disarm and demobilise. The army is currently involved in offensives against rebel groups in the Kachin, Shan and Rakhine states.
http://www.mmtimes.com/index.php/national-news/nay-pyi-taw/18563-peace-conference-widens-divisions-and-troubles-nld.html
ECONOMICS
FDI down $2bn YoY, but MIC approves 21 investments in January
There has been some mixed news on FDI. As was expected because of the uncertainty leading up to the election, there has been a drop in FDI approvals from $6.9bn to $4.9bn in the fiscal year to December. However, in the balance of the year, DICA remains hopeful that a further $1bn or so of FDI will be sanctioned.
Oil and gas and telecoms are, unsurprisingly, leading the field in terms of FDI, although DICA has announced that, in the year to date, 108 manufacturing projects totaling $720mn have been pledged in sectors such as garments, F&B, plastics and home decoration products.
31 new projects, many in garments and construction, have been approved by DICA in January, which has re-affirmed its revised target of $6bn in investment approvals for the full year (2014-15, $8.1bn).
http://www.mmtimes.com/index.php/business/18639-foreign-investment-falls-by-2-billion.html
Export earnings down $1bn YoY
According to the Ministry of Commerce, the drop in energy prices and reduced demand for jade in China has had its effect on the export figures, which have fallen from $9.7bn to $8.5bn in the fiscal year to late January. A drop in rice and fishery exports consequent to the recent floods (there was a rice export ban for a period) has not helped. Despite a fall in car imports, imports as a whole have held up better, confirming an expected deterioration in the trade deficit. Imports of investment goods, raw materials and consumer goods have risen slightly from $13.1bn to $13.5bn over the same period.
http://www.mmtimes.com/index.php/business/18881-export-earnings-down-by-1b-this-fiscal-year.html
Tourist arrivals rise to 4.7mn in 2015
The Irrawaddy has reported that the number of tourists visiting Myanmar has continued to rise sharply, reaching 4.7mn in 2015. The number, which includes all visitors—including day-traders crossing Myanmar’s frontiers—is slightly shy of the Tourism Ministry’s target, but still represents an increase of a little over 50% YoY. The figures for tourism revenues ($1.8bn in 2014) have not yet been released.
http://www.irrawaddy.com/burma/tourist-arrivals-for-2015-reached-4-68-million-ministry-says.html
Comments on Myanmar’s first Extractive Industries Transparency Initiative Report
Myanmar’s first release under the EITI initiative has been welcomed by NGOs such as Global Witness, which have commented that the levels of disclosure would have been “unthinkable” a few years ago. At the same time, they have remarked there is scope to increase transparency further.
According to these NGOs, a number of smaller companies representing approximately half of the revenues generated in the jade and mining sectors are not covered in the report. Its authors have responded to the criticism by saying that the coverage of companies will be widened in coming years, in a process that was always expected to take some time.
Following up on its own report on the illegal jade industry last year, Global Witness has said that the EITI report should have covered much more ground in this area and that EITI needs to do more to identify the beneficial owners of such operations.
The EITI report has recommended that around Ks 1.5trn of revenues accruing to SoEs from resource extraction, and the rules and practices governing their possible transfer to the state budget, should be made more transparent.
Use the following link to read the initial EITI report on Myanmar.
https://eiti.org/Myanmar/reports
BUSINESS
New Competition Law to come into effect in February 2017
President Thein Sein has issued a notice stipulating that the new Competition Law will become effective in a little over a year. The law prohibits anti-competitive acts such as abuses of dominance, mergers and unfair trading practice and attaches strong penalties to them. The government will be establishing a Competition Commission and will be drafting detailed rules that the new regulator will use to apply the law in the coming months.
Parliament passes new condominium law and new financial institutions law
The new Condominium Law, which passed through parliament on 23rd January, still awaits presidential approval but, once this is granted, foreigners will be permitted to buy up to 40% of condominium apartments in a given block, provided they are on the sixth floor, or above. Foreigners will still not be permitted own land or landed properties.
There are hopes that the passing of the law will help support the market whilst raising capital flows into Myanmar, and that developments near the borders with countries such as Thailand will attract extra interest. However, there has been some debate over how many properties will be covered by the law—in particular, whether it includes BOT projects built on government land. As the following article from the Myanmar Times shows, officials have indicated that they can be, provided the ministries owning the land register the projects correctly. The same officials have suggested that condominiums that existed or were under development before the passing of the law may also be included, if they are properly registered.
http://www.mmtimes.com/index.php/business/property-news/18918-ministries-to-hold-power-over-bot-condominium-sales.html
Parliament has also passed the new Banks and Financial Institutions Law and put it up for the president’s signature. The new law requires lenders to place cash equal to 5% of customer deposits with the central bank. (The previous requirement was a reserve equal to 10% of deposits, although 75% of this could be invested in bonds). The law also stipulates a minimum capital requirement of Ks 20bn, specifies rules and guidance on risk management, anti-money laundering, compliance and prudential requirements, whilst providing for a more level playing field between private sector, foreign and state-owned banks.
New procedures for environmental impact assessments
The Ministry of the Environment has issued its new EIA procedures—drafted with the assistance of the ADB—together with a first set of environmental quality guidelines, that aim to minimize levels of air, noise and water pollution.
The full text of the procedures and guidelines, and some comment thereon (including on the need for proper implementation and enforcement) can be read using the following link to the website of the Myanmar Centre for Responsible Business:
http://www.myanmar-responsiblebusiness.org/news/eia-procedures.html
IFC and UMFCCI sign co-operation agreement on corporate governance
The agreement was signed at a corporate governance conference attended by 400 business and government representatives in early February. Inter alia, the IFC will be helping companies struggling with weak boards, ill-defined director duties, and poor controls and transparency. Together with UMFCCI, the IFC will provide corporate governance workshops and training programmes for companies and teaching institutions such as universities.
The IFC’s press release on this initiative may be read using the following link: http://bit.ly/1TfGOva
Seven tenders for 4th telecom licence
The Myanmar Times has reported that 7 international firms have submitted expressions of interest to participate with the 11-member local consortium that will be operating Myanmar’s fourth mobile telecom licence. The companies include SingTel, Viettel, China Telecom, and MTN.
http://www.mmtimes.com/index.php/business/18490-new-environmental-impact-rules-released.html
Thirteen RFPs submitted for second round of foreign bank licences
Eight Taiwanese banks are among the thirteen that submitted RFPs for Myanmar’s second round of foreign licences. Eight applicants—State Bank of India, State Bank of Mauritius, Korea’s Kookmin Bank and Shinhan Bank, Taiwan’s Cathay United Bank, E.Sun and First Commercial Bank and Vietnam’s BIDV—were also short-listed in the first round of bidding. The additional five applicants are all Taiwanese. Countries with banks that were successful in the first round were barred from making additional submissions this time. The Central Bank has indicated it will announce the winning candidates some time in the first quarter of this year.
http://www.mmtimes.com/index.php/business/18903-taiwan-dominates-foreign-bank-licence-applications.html
Asia World announces group restructuring
Asia World, the conglomerate controlled by SDN-listed Stephen Law, has announced that since 2015 it has sold all its interests in toll roads, petrol stations and coal-fired power assets in order to focus on ports and airports, property and hydro-power. It has also indicated it has divested its interests in jade mining.
Please use the following link to read Asia World’s press release.
http://asiaworldcompany.com/pdf/2016jan27-awc-press-release-restructuring.pdf
In ITS report on the restructuring, the Myanmar Times has commented that Asia World has not disclosed who has taken over the businesses from which it has withdrawn.
http://www.mmtimes.com/index.php/business/18687-asia-world-sells-jade-mining-toll-road-businesses.html
Kerry Logistics to invest in inland ports
Kerry Logistics has been awarded a concession to operate inland ports in Mandalay and Yangon, in a step that will help advance Myanmar’s plan to develop its railway and mass cargo transportation infrastructure. According to the company’s press release, the ports will serve as container and cargo terminals linked by railway to major routes in the country, as hubs for importers and exporters in and out of Yangon and Thilawa, as well as serving cross-border flows from countries such as China and Thailand.
The full text of the company’s release can be read using the following link: http://bit.ly/1QZfVIM
IHH to build Yangon hospital
A consortium comprising IHH Healthcare (52%), Macondray Holdings (10.5%) and two Myanmar-incorporated companies AMMK Medicare (21.5%) and Global Star (16%) has announced it has commenced construction of a 250-bed hospital in Yangon. The consortium is investing $70mn in the project, which is the first investment in Myanmar by IHH, one of the world’s largest hospital groups, operating over 9,000 beds in 49 hospitals. The new hospital is due to open in 2020.
Please use the following link to read IHH’s recent release on the venture: http://bit.ly/1PGzHGp
IFC supports City Mart retail expansion, mulls investment in Yangon port infrastructure
IFC is providing a $25mn loan to Myanmar’s largest retailing group, City Mart, which it says “will support its expansion plans, boost the country’s retail sector, and create much-needed jobs along the supply chain.”
City Mart intends to add about 20 new supermarkets and hypermarkets to its base of over 150 stores in the next 3 years. It expects its purchases from domestic suppliers to rise six-fold over the period to $150mn by 2021 and to create 4,000 new jobs, half of which will be for women.
Please use the following link to read the IFC’s press release on its investment: http://bit.ly/1ow3hrl
The IFC has also disclosed it is considering a financing package for Myanmar Industrial Port (MIP), to be used to refinance existing loans as well as to help in the completion of its current capital spending programme. According to the IFC’s website, the company—which operates a container port on the Yangon River—handled 278,000 TEUs in 2015, equivalent to a 40%+ market share.
http://bit.ly/1ow3hrl
Second phase of EU’s SMART programme to scale-up and accelerate support for garment industry
In the last few years, the SMART programme has been supporting Myanmar’s garment manufacturers by assisting them on social compliance and human resource management. These activities are to be expanded in a second phase of the programme, in which assistance is to be introduced in new areas such as sustainable production and transparency in procurement practices.
With SMART’s support, Myanmar manufacturers have been getting a better understanding of the requirements of international buyers and consumers, thus aiding competitiveness. Garment exports to Europe from Myanmar enjoy low tariffs under the generalized system of preferences and, having more than doubled in the last two years, the industry is now one of Myanmar’s largest exporters, after oil and gas.
Please use the following link to read SMART’s release on the conference and programme:
http://www.smartmyanmar.org/uncategorized/smart-myanmar-launches-2nd-project-phase/
